Chapter 7

Minority Interests

The per-share figures the market prices Erajaya on — trailing earnings and book value attributable to owners — are struck after a deduction that is quietly getting larger. A growing share of group profit and equity belongs to minority partners in the very verticals that are growing fastest. Non-controlling interests took 10.1% of profit in the first half of 2026, a high for the series and up from a 3.6% trough in 2023, and reached 13.4% of equity by June 2026. The core phone business remains owner-controlled; the growth around it, less so.

Sources: H1 2026 interim statements, statement of profit or loss and financial position [1] [2]; FY2025 and FY2023 audited statements [3].

The wedge between group and owner profit

Every rupiah of profit Erajaya reports splits two ways: to the owners of the parent, and to the outside shareholders of its partly-owned subsidiaries. Only the owners' slice reaches the EPS of Rp89.77 and the equity of roughly Rp9.5 trillion that Financials and Estimates and Business and Balance Sheet valued the stock against. The minority slice is real profit, earned inside the consolidation, that belongs to someone else.

That slice is not on a straight line. It was 9.4% of group profit in FY2021, fell through the 2022–2023 downturn to a 3.6% low as the company simplified its structure ahead of a subsidiary listing, and has since climbed each period to a series high of 10.1% in the first half of 2026 [4] [5].

Sources: consolidated statements of profit or loss, FY2021 [6], FY2023 [7], FY2024 [8], FY2025 [9] and H1 2026 [10]. 1H2026 is a six-month figure; the % share is period-comparable.

The clearest way to see the effect is to compare how fast the two slices grow. Between FY2023 and FY2025, group profit rose 53.2% but profit to owners rose only 44.8% — the 8.4-point gap is the widening minority claim [11] [12]. The half-year repeats it: group profit up 44.0% year on year, owner profit up 38.0% [13]. On the comprehensive-income line — which includes currency translation on the overseas subsidiaries — the minority share is higher still, at 11.8% of the H1 2026 total, because much of the foreign-exchange movement sits in partly-owned foreign entities [14].

Where the minorities sit

The balance sheet tells the same story from the equity side. Non-controlling interests grew from Rp923.1bn at the end of 2024 [15] to Rp1,035.7bn a year later, then jumped to Rp1,464.6bn by June 2026 — from 10.2% to 13.4% of total equity in six months [16]. The June step is almost entirely one event, addressed below. The composition matters more than the total: the minority capital is concentrated in four vehicles, and they are not the core phone-distribution business.

Source: H1 2026 interim statements, Note 41 Non-controlling Interests in Subsidiaries [17]. "Other, net" nets a Rp65.6bn deficit at Erajaya Digital Retail Pte Ltd against several smaller positives.

CG Computers Sdn Bhd is the largest single minority, at Rp457.8bn. It runs Erajaya's Malaysian handset and IoT retail — the Switch, Urban Republic and Samsung stores that make up most of the International Business vertical [18]. PT Sinar Eka Selaras Tbk (SES), at Rp365.8bn, is the reason the minority line exists at scale at all: SES listed on the Indonesia Stock Exchange in August 2023, selling 1,037,500,000 shares to the public at Rp390, which cut Erajaya's holding to 80.00% [19]. SES is not a peripheral asset — it is Erajaya's active-lifestyle solutions arm, distributing gadgets and sport-lifestyle brands — DJI, Garmin, Shokz and others — alongside accessories and IoT devices [20]. That is the same 23%-gross-margin accessories pool that Tailwinds and Margin identified as the one lever capable of widening Erajaya's fixed reseller spread. One-fifth of it now accrues to SES's public shareholders rather than to Erajaya's.

The Erablue mechanics

The June 2026 jump in minority equity is the consolidation of PT Era Blu Elektronik, and its mechanics are worth stating precisely because they also inflate the reported growth rate. Era Blu is the consumer-electronics store chain built with Vietnam's The Gioi Di Dong (Mobile World). Erajaya's retail subsidiary has held 55% of it since March 2022, when Mobile World subscribed new shares and cut Erajaya from 98% to 55%; under a shareholders' agreement the venture was jointly controlled, so it was equity-accounted — one line in the income statement, no revenue on the group's face [21]. On 30 January 2026 the articles of association changed to give Erajaya's subsidiary control, and Era Blu became a fully consolidated subsidiary — at the same 55% ownership [22].

Two things follow. First, the change brought Rp1,968.8bn of Era Blu assets onto the balance sheet and a Rp331.2bn minority with them — the 45% that belongs to Mobile World [23] [24]. Second, part of the half-year's headline revenue growth is this reclassification, not organic demand: Era Blu turned over Rp985.1bn in the first half of 2025 while still an off-balance-sheet joint venture, and that volume now sits inside consolidated sales [25]. The point Financials and Estimates flagged — that the half is not cleanly organic — has a name, and it is Era Blu.

The verticals carrying the minorities are also the lease-heavy ones. Group right-of-use assets rose from Rp1,928.9bn at the end of 2025 to Rp2,770.0bn at June 2026, against lease liabilities of Rp1,822.9bn — an Era Blu-driven step-up that lands the fixed-rent obligations of a store network on the books while 45% of that network's profit is spoken for [26] [27].

The growth is where the ownership is thinnest

Erajaya reports its business as four verticals. In the first half of 2026 the two smallest — Active Lifestyle and Food and Nourishment — grew fastest, and both are carried substantially through partly-owned vehicles.

Source: H1 2026 interim statements, Note 35 Segment Information (vertical breakdown) [28].

Active Lifestyle grew 41% and Food and Nourishment 32%, against 21% for the Digital phone core and 8% for the international arm [29]. Digital is still 74% of sales and is held almost wholly by owners; but the incremental growth story the bulls are buying — diversification away from the 8.8%-margin phone shelf — runs through SES (80% owned) and the Food and Nourishment ventures, several of which are minority-partnered and loss-making today. The Chagee tea joint venture lost Rp38.9bn in the half, up from Rp4.0bn a year earlier, and the MST Golf retail venture lost Rp9.7bn [30]. Diversification is real, but it is being built with other people's capital, and the losses on the way up are shared while the margin, if it comes, will be too.

Feature or leak

The read is that a professional investor should measure Erajaya's growth in owner terms, not group terms — because the two are diverging, and the divergence is structural, not a one-off. Owner EPS will keep growing more slowly than consolidated sales for as long as the fastest-growing verticals are the partly-owned ones.

The strongest fact against treating this as a problem is that minority capital is funding the growth a cash-constrained parent could not easily fund itself. Cash Conversion and Funding and Covenants showed a business whose working capital and tax receivables absorb most of its reported profit and whose bank lines are near-fully committed at their seasonal peak. Against that backdrop, selling 20% of SES to the public raised roughly Rp404.6bn of external equity, and the Mobile World and Malaysian partnerships put someone else's balance sheet behind the electronics and overseas expansion [31]. A minority share of a business you could not otherwise have built is not the same as value leaking out of one you already owned. For the value investor weighing a 0.65x book, sub-5x earnings entry, the relevant point is narrower: the discount is struck on the owners' slice, and that slice is genuinely 87% of equity and 90% of profit today — the minority claim is a drag on the rate at which owner value compounds, not a hole in the base being bought.

What would change the read in either direction is observable. If the minority share of profit keeps climbing past the low-teens while owner EPS growth lags consolidated growth by widening margins, the diversification is compounding for partners faster than for owners. If instead the Food and Nourishment losses turn and SES's accessories margin lifts the blended spread that Tailwinds and Margin found stuck in a 42-basis-point band, the minority capital will have bought owners a better business. Three things are worth watching: the non-controlling share of each period's profit (10.1% is the number to beat); whether Era Blu contributes owner profit or only revenue and minority losses now that it consolidates; and whether SES's own disclosures — it files separately as a listed company — show the accessories pool earning its keep.